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December 29, 2017

HKMA has completed its annual assessment of the list of domestic systemically important authorized institutions (D-SIBs). Based on the assessment results, Industrial and Commercial Bank of China (Asia) Limited has been added to the list of authorized institutions designated as D-SIBs and, therefore, the overall number of D-SIBs has increased to six. The updated list of D-SIBs will take effect on January 01, 2018.

The other designated D-SIBs are Standard Chartered Bank (Hong Kong) Limited, The Bank of East Asia Limited, Hang Seng Bank Limited, Bank of China (Hong Kong) Limited, and The Hongkong and Shanghai Banking Corporation Limited. HKMA has made available the list of D-SIBs, along with the information on their respective buckets and Higher Loss Absorbency (HLA) requirements for 2018 and 2019. Under the D-SIB framework, each authorized institutions designated as a D-SIB will be required to include a HLA requirement into the calculation of its regulatory capital buffers within a period of 12 months after the formal notification of its designation.

In line with the phase-in arrangements in the frameworks issued by the Basel Committee for assessing D-SIBs and global systemically important banks (G-SIBs), the full amount of the HLA requirement will be phased-in from 2016 to 2019, in parallel with the Capital Conservation Buffer (CCB) and Countercyclical Capital Buffer (CCyB). Ultimately, the HLA requirement applicable to a D-SIB (expressed as a ratio of an authorized institution’s Common Equity Tier 1 capital to its risk-weighted assets as calculated under the Banking Capital Rules) will range between 1.0% and 3.5% (depending on the assessed level of the systemic importance of the D-SIB). Under the phase-in provisions, the levels of HLA requirement for 2019 will be increased to the range of 1.0% to 3.5% (from a range of 0.75% to 2.625% in 2018).

Keywords: Asia Pacific, Hong Kong, Banking, D-SIB, HLA, HKMA

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